In Kenyan slums, residents lack good sanitation options. In fact, they're typically faced with two distinct options: The infamous “flying toilet,” whereby people defecate into a thin polyurethane sack, tie it up and throw it outside, or the public toilet, which costs between four and six cents per use, and is usually overflowing with filth.

Either option, of course, has unique health and environmental consequences.

“In Nairobi, 90 percent of the waste is dumped into rivers," says David Auerbach, one of the co-founders of Sanergy, a manufacturer of low-cost sanitation facilities. "So what that actually means is four-million metric tons of waste every single year are going into open areas, which is a huge public health risk.”

While visiting the Mathare slum several years ago, Auerbach saw a local youth group running a toilet as a business. Although the idea was good, he says, the toilet needed improvements in terms of waste disposal.

This is when he and his Sanergy co-founders got the idea. “We build low-cost sanitation facilities, which we franchise to people in the community and they run them as businesses," he says.

Each Fresh Life toilet costs about $500, which includes training, marketing, branding, installation, demolition insurance and a daily waste collection service. The franchise owners are required to supply toilet paper, soap and a hand washing station for their patrons – amenities that are non-existent in public toilets.

Then the Fresh Life Frontline, otherwise known as waste collectors, remove the waste on a daily basis and bring it to a centralized processing facility where it is turned into fertilizer.

Given Sanergy’s close working relationships with its Fresh Life operators, and its emphasis on proper waste disposal, Kiva – a non-profit organization that facilitates microfinance loans for people in developing countries – took notice. The group has decided to partner Sanergy to release its first sanitation loans in East Africa.

According to Mac Parish, senior field support specialist for Kiva in Anglophone Africa, the group allows lenders to provide small amounts of money at zero-percent interest to designated projects.

“I think this story with Sanergy is incredibly compelling, [because] you really hit so many points on the value chain, of social value," he says. "You’re providing sanitation in slums; you are providing employment in slums; you’re sustaining entrepreneurship within these areas; you’re then collecting the waste, turning it into fertilizer, creating organic fertilizer and, hopefully, in the future, creating energy from this waste as well.”

In the slums of Mukuru, where the Fresh Life toilets are being introduced, residents are excited about the initiative.

Mercyline Atieno, who recently bought a Fresh Life toilet with the assistance of a Kiva loan, is a 42-year-old mother of eight and grandmother of one who also supports seven orphans.

She wants to use the proceeds from her business to send the orphans – especially the girls – to school.

“You see, people prefer to go to [the] Fresh Life toilet and they offer to pay five shillings rather than pay three shillings to go to the dirty toilet," she says, explaining that her toilet is a noticeably better product than what is currently available, giving her confidence in its profitability. "This toilet will change [the] life of the slum people because even them, they want good things. They don’t want those bad things.”

While Parish says some Kiva lenders may be hesitant to support a toilet business, since Kiva is better known for providing loan access to farmers, shopkeepers and more traditional entrepreneurs, he thinks they will appreciate the broader community benefits.

“Sanitation is such a pressing issue," he says. "A toilet is not a sexy loan. It’s a toilet. Right? But the impact that that toilet can have and the ripple effect, because of the fact that that toilet is a Fresh Life toilet and Sanergy is the one operating it, I think it’s huge. What Kiva has to do as we restructure these profiles and we structure the content around Sanergy is to make sure that we’re giving the full story to our lenders.”

Sanergy has already franchised 86 Fresh Life toilets to 50 entrepreneurs in Mukuru, and the company plans to expand to other slums.